Is Infosys Ltd ADR (INFY) overvalued?
On Equity Rank's model estimate, INFY trades 13% above its fair value. Infosys Ltd ADR (INFY) last closed at $12.50; the multi-method model fair value is $11.06.
| Price | Model fair value | Price vs model |
|---|---|---|
| $12.50 | $11.06 | 13% above |
What the answer rests on
- 3 of 10 valuation methods put INFY's value above its price and 7 put it below, so the methods disagree.
- To justify today's price, INFY's free cash flow would need to grow about -8.4% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 13.8% a year.
- INFY trades at 15.1 times its last year's earnings, against a median of 20.8 for 30 profitable IT Services companies.
- Over the past year the price sat below the model fair value on 0% of trading days. The gap ranged from 7% above to 27% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind INFY's fair value · What prices assume · Other companies